WifiSlam could be the final technology Apple (AAPL) needed to truly leverage its army of iOS users for maximum value. There are a couple developments coming out of Apple that look extremely promising in providing Apple a competitive advantage for the iPhone and iPad to grow market share. When Siri came out in the iPhone 4S it was a huge hit and helped Apple differentiate the iPhone from the competitors and became the "must have" smartphone. Apple added this feature to the iPad for the third generation and if leveraged right could continue to provide even more value to Apple. These two applications coupled with Apple's maps app and the ability to make secure mobile payments from Apple devices could set the stage for continued growth in iPhone and iPad sales. I know Apple isn't taking mobile payments yet but that may all soon change with the rumored fingerprint scanners for the latest version of the iPhone. If true this would provide greater security to the iPhone and open near-field communication technology for Apple to use to create a true digital wallet.
But it is all about how these technologies are integrated together to make the user experience phenomenal that will create value for Apple. First, let's go over what WifiSlam is. The quick non-technical version of what WifiSlam does is it allows your smartphone or tablet to pinpoint its location with an accuracy of approximately 8 feet when it is inside a building. The app does that by using the Wi-Fi signals that are in the building along with the iPhone's internal compass and accelerometer. Apple can then use this to build a map along with the floor plan, or at least pathways, of the building. Apple then uses all of the iOS users to map out all of the indoor spaces that they visit making the app more valuable every day.
A natural connection is to integrate it into the map application so I can get directions to the airport and once inside to my gate. But let's back up a second, not only can Apple map out all of the indoor spaces with our data but it could identify the level of traffic of iOS users to those particular locations. Then Apple would have really high quality data to target advertisements. Apple already has tracking technology in the iPhone 5 called IFA, which stands for Identifier for Advertisers. Again with a quick non-technical explanation, this technology uses a temporary identifier, like a cookie, to track the behavior of the person using the device. It protects your privacy by not identifying you but generates information on what is being viewed or searched on the device. It then uses that information to target an appropriate advertisement to the user of the device. If I had been searching for vacations to Hawaii for example, advertisements for vacation packages might start showing up on my device.
OK, back to WifiSlam. if advertisers know physically where my device is, what possible interests I might have at that time from the behavior on the device, then targeted advertisements effectiveness would be increased dramatically. A quick example is letting me know Nordstrom's, which is across the street from where I am now, is having a sale on shoes because I had been searching for shoes on my phone. It would take a small action for me to go check it out and I am far more likely to do so since the store is just across the street not across town. If I am near a coffee shop it might prompt a discount coupon for a latte I can download to my passbook through the iTunes Store. These are quick examples but I think you get the point. Knowing the traffic patterns allows Apple to identify places that would be effective for advertising making them more effective and earning more revenue from them. If Apple could drive that traffic back to the iTunes or App Store to make the purchase with the stored credit card on file it could earn additional revenue by increasing the monetization rate for the huge database of active iTunes accounts.
Now let's get back to Siri. We have WifiSlam and the map application. I want to simply ask Siri for directions, maybe because I am driving or doing something that will not allow me to read a screen. She could use the GPS system to provide verbal directions to the airport. Once I am at the airport she could provide directions to my gate by accessing the ticket information I already have stored on my phone. On the way to the gate, since hundreds of iPhone users have already mapped it, advertisements could be provided to my device for a latte before I get to the gate. Or I could ask Siri where I could get a latte and she could direct me to a close by coffee shop from one of Apple's advertisers. A couple of fancy commercials and you could train your army of iPhone users to ask Siri about deals and discounts for the mall I am heading to. Siri could then give me the litany of stores of Apple's advertisers who have a sale event. Siri needs to be integrated very closely with all aspects of the other technologies. An interesting aspect behind Siri is it bypasses traditional search engines by giving me the information directly. This could be a way to disrupt Google's (GOOG) strangle hold on search advertisements. Yahoo (YHOO) is hungry to partner with Apple to increase the traffic going to its sites maybe Apple could get the information it needs for Siri from a stronger partnership with Yahoo while keeping Google the default search engine. This would increase the value of Siri without removing Google's search engine, which Apple sees as the best in the business. Google also pays Apple to be the default search engine so retaining that revenue while earning additional revenue through Siri could be a double win for Apple.
One last item I find fascinating about WifiSlam is the ability to use it with social media to find my friends and family. I see this as a great asset to the iOS ecosystem. If I am meeting up with a friend inside a building it could notify me where they are. This is great for me as a parent too helping me to track down where my child may be in the building. It would be possible to integrate location into my reminders with this technology. My phone could alert me when I am near the pharmacy to pick up the prescription I had requested a reminder for. Or let me tell Siri and have it create the location based reminder and alert me to refill my prescription. There are so many possibilities to what could be done by a tight integration of these applications. I recently researched intelligent systems and it really opened my eyes to the possibilities of integrating different networked devices together with the power of a data center and how that could add value to our lives. We are very close to the Internet of Things, which really leverages big data. Siri could interface with the website providing real-time traffic information or accident information and alert me as I am driving that there is a traffic jam up ahead and suggest a different route.
The possibilities are endless and I believe in the next few years if Apple integrates these applications and technologies together in the correct manner they could maintain the differentiation of the Apple brand from the competitors and continue to see impressive growth while commanding a premium price for the Apple products.